Life insurance is one of the most, if not the most important plan to get as an adult. It is a plan that pays an amount to your family or dependents upon death and/or terminal illness. If getting a personal accident or health insurance is for your own sake, life insurance is bought for the sake of your loved ones. However, life insurance is quite a broad category, and we here at fundMyLife receives plenty of questions about it. As such, it would be good to write about these questions. In this article, fundMyLife talks about things to ask about life insurance.
#1 What affects my life insurance premiums?
Insurance is all about managing risks, be it from yourself or your surroundings. Unsurprisingly, age is a factor that determines your premiums since there’s a higher chance of you getting sick later in your life. Similarly, men have a statistically shorter lifespan compared to women, so premiums are higher for men too. An infamous factor for insurance premium increase – smoking status – is involved as well. There are smokers who lie about their smoking status, but it only results in an invalid claim later in their lives if it was found that they smoked. It is easy to detect smoking status via blood tests, or if cross-referenced with prior health checkups or doctor visits.
Other factors include health status as determined by your health checkup before purchasing the insurance, family history, and the job you take on as well. Personal accident plans consider your occupation as well, as different occupations have different risk classes.
#2 Do I need a medical exam?
A medical exam is almost always part of the life insurance purchase process. You need to take the medical exam to demonstrate to the insurance company that you’re not a risky customer. No-medical underwriting policies exist, but typically these policies have lower limit for sum assured to reflect the risk that the company.
On the bright side, if you undergo a medical exam you would know whether you’re health or otherwise.
#3 What if my employer/school already bought life insurance for me?
A very common question that we encounter, but the equally common answer is “no”. While your workplace offers life insurance as a perk, the payout is usually too little. Furthermore, there is the risk of losing your job at any point in time and with it, your life insurance plan. A good perk is that sometimes no medical underwriting is required, meaning even employees with health issues may benefit from group plans at the workplace.
How about students? A casual look at National University of Singapore’s group insurance plan reveals that the payout upon accidental death is only $30,000, which is too little as a normal plan. The payout other universities, polytechnics, and ITEs is similarly low as well. There is very little control you have as a student if you only subscribe to your educational institution’s group plan.
As such, it is recommended to get a private plan to supplement your existing ones.
#4 What kinds of life insurance are there?
There are two (or more, depending who you ask) kinds of life insurance, differentiated based on the term length. First is whole life insurance, which protects you over your lifetime. The second is term life insurance, as its name implies it protects you over a fixed time period. The last one is direct insurance products. It is different from the other two because direct insurance products do not involve financial advisers and are generally bought directly from insurance company branches or purchased online.
How about the pros and cons of each? There is an ongoing debate about the merits and demerits of both, with no clear winner in sight. The comparison is a whole different matter to be explore in another article, another time.
That’s all folks. We hope that this article shed some light on the things to ask about life insurance. We here at fundMyLife believe in educating consumers on insurance matters. However, if you have any more questions on life insurance, why not ask our curated pool of trusted financial advisers?
Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.
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